Hello friends,
I am doing good, and I hope that you are having a good time with your near and dear ones.
I don't know whether it's just me or some other people in India who also observe the same that I am going to discuss in this post. I have observed that in India many companies are pushing us to go on the credit. This credit is not about getting funds instead they are bringing different types of campaigns and products that are lucrative. They are trying to put more people on their side and want these people to use their services. For example, they can give you some limits that you can utilize for online shopping, and let me mention here that they do not provide any cash withdrawal services.
I have been trying to observe this thing and I feel like there are so many companies operating on the same pattern. I recently talked about credit cards and getting newspaper advertisements for credit cards is very common. We get to see a lot of advertisements on social media and even on different news websites. Credit card is not a new product that we have seen but there is another product which is called Buy Now, Pay Later. You can avail of this without any credit card and it's available for free. The company will be giving you a time limit and a certain amount limit that you can use.
I have been getting some emails for some time and even WhatsApp messages about such product offerings. I want to confirm here that I am a person who lives on debit and not on credit. I have zero liability in my life as of now I'm very happy with this because whatever I earn is my money. I spend what I think is a necessity for me and I know how much money I have in my pocket. Because I do not have any credit product I also have no scope for overspending that I can't afford. Even if I do the overspending then it is my money and I am not liable to pay it to anyone.
With products like by now pay later these companies are trying to create a trap where people start to spend without even having money. It looks exciting because we can shop for things even when we have no money in our pocket but have you ever thought about how is it going to end? It's not free money that you are getting and you will have to pay it back in a certain time. Another part that most of us just ignore is the penalty. You know what they charge a huge amount of penalty if you do not repay the outstanding on time. Generally, credit cards charge an interest rate between 35 to 40% along with some flat late payment penalty. Now with such products like Bnpl, you'll have to pay much more and I believe this is where these companies earn money.
I don't know but just have a thought in my mind that these companies are looking for customers who just buy things without even thinking if they will be able to pay or not. Ultimately they have to pay it back and they will be charged a huge amount as part of the penalty and some interest. These companies will report the credit history to the CIBIL and because of that one has to pay them back. We can say that they are looking for customers who are not in the situation to pay back the entire amount on time. An honest customer who pays them back on time is not their target it seems and these companies are trying to trap people who are not good in money management and they just fall into their trap to avail of their products.
I don't know if I will be using such products but for now, it's interesting to see how different companies are operating to earn some money by following different marketing tactics. You can say that there is a lot of innovation happening in this market where the companies are pushing people to live a life that is on the liability and not on the assets building. This is not the right lifestyle because why should I buy something if I have no money and buying on EMI or credit is not my thing?
Thank you
Peace @mukund123